After six months we were able to finally purchase a short sale in Georgetown, CA. This blog covered the six long months of the purchase and is now covering the moving and setup of our new farm, MountainEars Farm.

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Friday, January 29, 2010

Been a little off on my updates...Chris is now in Haiti helping with relief efforts so I've been a little sidetracked to say the least (you can follow what is going on with this amazing trip on the other blog, click here)! I have been checking in with the Realtors though, we did get word that BofA confirmed they have received the package and have it under review. They have also completed their BPO (appraisal), so all we are waiting on at this point is a confirmation of who the assigned negotiator is and hopefully we'll know that early next week.

One reason why I reference this article though is that it mentions that BofA does seem to be a little better in processing Short Sales where they are second on the title. However, a little bit better from crappy is not necessarily a good thing in many cases....but we will find out.

Once we have received a copy of the signed purchase contract:
* Within approximately 2 days of receiving the faxed documents, the customer or agent will receive confirmation of the received purchase contract. If the offer is possibly viable, an interior appraisal will be ordered.
* Within an additional 3 days an appraiser will be assigned, they will contact the customer or their agent to schedule an appointment to conduct an interior appraisal.
* Approximately 7 to 10 days after the appraisal is ordered, the results of the appraisal will be received by us. This is absolutely dependent on obtaining access to the property in a timely manner.
* Upon receipt of the appraisal, we will conduct an analysis to determine if the Short Sale offer is aligned with the fair market value.

I think the key thing is in the first line of this, "Once we have received a copy" as it seems the hardest thing to do is to get them the copy of these documents. As we have seen already, and as others have mentioned in various posts, just getting the documents faxed in using their "system" can be a 3-4 week process. Our Realtors are now two weeks into this and still do not have a confirmation that BofA has received the documents, the rest of the timelines don't start until they do. Hopefully we'll have some progress this next week.

Friday, January 22, 2010

Hopefully this is good news. As I mentioned in a previous post (click here to view) Bank of America has two systems for submitting short sale paperwork. The older, FAX system which has been plagued with huge delays and other issues and the new online Equator system. My understanding from the blog posting I was referring to was that the Equator system was only being used for primary loans, not equity lines / seconds.

Well, received word today that our Realtor is going to be able to submit using the Equator system, so as I said, hopefully this is some good news. I'll feel more comfortable once they can at least acknowledge receipt of the package!

Thursday, January 21, 2010

Found another one on this website (click here for the full article), this site reviews/rates different banks on their ability to close short sales for 1st and 2nd mortgages. In this case, it is referring to Bank of America. I need to stop reading on the Internet, it's depressing me....

2nds - Bank of America continues to present the most difficult challenges in the servicing industry on Short Sale proposals, on home equity 2nds. It takes approximately 5 weeks for them to acknowledge receipt of the package. They typically demand 5% of the net proceeds which typically equates to 12-15% of the loan balance when other lenders are closer to 10%. (This is still dramatically higher than the $3,000 in the treasury proposal). If the file is charged off and sent to recovery/collections we have heard from some agents that they are surprisingly easier to work with than the loss mitigation department. This may not be true in all instances.

Bank of America is currently who we are waiting on for things to move forward with this short sale. They hold the second mortgage on the house and need to approve the short sale before things can move forward. If they don't, then the house could foreclose and they get nothing, so you would think they would be all about trying to get some money out of the deal and probably some insurance money too.
I've heard from several people though that Bank of America is one of the worst at approving short sales and the slowest in responding. On Wikipedia it states in their Short Sale page (click here to view) the following (which does not have a citation as to where it is from, so take it at face value);

Short sale success rates vary from state to state and from bank to bank. Bank of America short sales, as of 2009 are still the longest to be approved and have the highest failure rate. Whereas, Citi and banks like Wells Fargo tend to move faster. Smaller "local" banks tend to have their own rules, but will typically approve the short sale in days, not months.

This recent blog posting (click here to view) talks about a new system that Bank of America is using for processing short sales, primarily for "Senior Loans" or First Mortgages. In our case, I think we are dealing with an Equity Line which still has to go through the FAX system which apparently has been notoriously horrible. This can be looked at positively I guess in that Bank of America is trying to improve I guess, but also in a negative way in that we are still dealing with the crappy system!

There is more activity happening, so at least we are not completely stuck. What we understand at this point is that the 1st mortgage folks have the complete offer and are waiting to put their approval on the whole process. The paperwork has been submitted to the 2nd mortgage folks (BofA) that will give them a "token" payoff for their loan. They will not take a total loss, the stimulus package will provide them with an insurance payout for the rest, just like the 1st mortgage folks will get. If the 2nd mortgage folks accept the offer (that can take 7-10 days) then we can get the approval from the 1st and we can go into escrow!

So, not a done deal yet, but this is farther than we made it with the previous mortgage holder. The fact that we're now talking to the 2nd mortgage holder on the deal is a good thing and puts us one step closer we hope.

Friday, January 8, 2010

The new "bank" has the mortgage. They are really a company that deals with bad loans and tries to clear them off the books for investors, so their job is to close this up (in our case, hopefully by getting this short sale completed).

The new bank also has the hardship package in their hands from the seller and they are currently reviewing to make sure they have everything they need.

Once they complete their review and they think everything is in order, they will take the package to the "investor" to get approval of the short sale.

What we don't know:

How long will it take to get an approval from the investor

How the second mortgage will be handled as part of this transaction

In any case, once we can get past this initial hurdle, which seems so close, then theoretically we can open up escrow for this deal. There remains some other hurdles of course (did I say that short sales were painful?). Probably the biggest one is the appraisal from our bank to secure our loan. While we are approved for the loan amount, the bank has to have an appraisal that will cover the loan from a loss perspective. The challenge is that properties are so depressed right now that even our offer price could be high in our banks mind, so we'll have to see how that goes when the time comes. Right now though our focus is getting that approval from the investor(s) that we can move forward.

We had confirmation today that when the loan was transferred to the new servicing company that it did not transfer with an approval. So, next steps is to find out how things will proceed with the new owner of the mortgage. The good news is that so far they have been responsive and the Realtor and the Owner are both contact them and getting live people, so hopefully they are motivated to close this quickly after the transfer. Both the Realtor and the Owner are planning on contacting them on Wednesday (the 6th) to find out if they have received and reviewed the physical file after the transfer to them. They had been informed that they should by this date and that was when they should call back.

Monday, January 4, 2010

Well, the sellers mortgage has been transferred to the new company (see my last post: Good news or Setback?) but we don't know anything yet. Our Realtor spoke with the new company, but they don't have the physical file yet, they told him they should have it by Wednesday so he will be contacting them....we wait yet some more!